Exhibit 1.1
Form of Proposed Agency Agreement Among
EverTrust Financial Group, Inc., Xxxxxxx Mutual Bank and Xxxxxxx Xxxx & Company
EVERTRUST FINANCIAL GROUP, INC.
Up to 8,986,250 Shares
COMMON STOCK
(No Par Value)
Subscription Price $10.00 Per Share
[DRAFT AGENCY AGREEMENT]
August ___, 1999
Xxxxxxx Xxxx & Company, a Division
of Xxxxx, Xxxxxxxx & Xxxxx, Inc.
000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxx 00000-0000
Ladies and Gentlemen:
EverTrust Financial Group, Inc., a mutual holding company (reference to the
"Company" include the Company in the mutual or stock form, as indicated by the
context), and Everett Mutual Bank, a Washington state-chartered savings bank
(the "Bank"), with its deposit accounts insured by the Bank Insurance Fund
("BIF") administered by the Federal Deposit Insurance Corporation ("FDIC"),
hereby confirm their agreement with Xxxxxxx Xxxx & Company, a division of Xxxxx,
Xxxxxxxx & Xxxxx, Inc. ("Xxxx") as follows:
Section 1. The Offering. The Company, in accordance with its plan of
conversion adopted by its Board of Directors (the "Plan"), intends to convert
from mutual to stock form and to offer and sell up to 8,986,250 shares of its
common stock, no par value per share (the "Shares" or "Common Stock"), in a
subscription offering (the "Subscription Offering") to (1) persons with $50.00
or more on deposit at the Bank as of December 31, 1997 ("Eligible Account
Holders"), (2) the Company's Employee Stock Ownership Plan ("ESOP"), (3) persons
with $50.00 or more on deposit at the Bank as of June 30, 1999 ("Supplemental
Eligible Account Holders") (4) the Bank's depositors and Borrowers as of _______
____, 1999 (other than Eligible Account Holders and Supplemental Eligible
Account Holders) ("Other Members"), and (5) persons with $50.00 or more on
deposit at the Commercial Bank of Xxxxxxx as of December 31, 1997 ("Commercial
Depositors"). Subject to the prior subscription rights of the above-listed
parties, the Company is offering for sale in a direct community offering (the
"Direct Community Offering" and, when referred to together with the Subscription
Offering, the "Subscription and Community Offering") conducted concurrently with
the Subscription
Offering, the Shares not so subscribed for or ordered in the Subscription
Offering to certain members of the general public to whom a copy of the
Prospectus (as hereinafter defined) is delivered, with a preference given to
natural persons and trusts of natural persons who are permanent residents of
Snohomish County (the "Local Community") ("Other Subscribers") (all such
offerees being referred to in the aggregate as "Eligible Offerees"). It is
anticipated that shares not subscribed for in the Subscription and Community
Offering will be offered to members of the general public on a best efforts
basis through a selected dealer arrangement (the "Syndicated Community
Offering") (the Subscription Offering, Direct Community Offering and Syndicated
Community Offering are collectively referred to as the "Offering"). It is
acknowledged that the purchase of Shares in the Offering is subject to the
maximum and minimum purchase limitations as described in the Plan and that the
Company and the Bank may reject, in whole or in part, any orders received in the
Direct Community Offering or Syndicated Community Offering. Collectively, these
transactions are referred to herein as the "Conversion."
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (File No. 333-81125) (the
"Registration Statement") containing a prospectus relating to the Offering for
the registration of the Shares under the Securities Act of 1933 (the "1933
Act"), and has filed such amendments thereof, if any, and such amended
prospectuses as may have been required to the date hereof. The prospectus, as
amended, on file with the Commission at the time the Registration Statement
initially became effective is hereinafter called the "Prospectus," except that
if any prospectus is filed by the Company pursuant to Rule 424(b) or (c) of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") differing from the prospectus on file at the time the Registration
Statement initially becomes effective, the term "Prospectus" shall refer to the
prospectus filed pursuant to Rule 424(b) or (c) from and after the time said
prospectus is filed with the Commission.
In accordance with ________ (the "Conversion Regulations"), the Company and
the Bank have filed with the Washington Department of Financial Institutions
("Department of Financial Institutions") an Application for Conversion (the
"Conversion Application"), including the Prospectus, and has filed such
amendments thereto, if any, as may have been required by the Department of
Financial Institutions. The Conversion Application was also filed with the
Federal Deposit Insurance Corporation ("FDIC") for their no objection to the
Conversion. The Conversion Application has been approved by the Department of
Financial Institutions and the FDIC has issued a non-objection letter to the
Conversion. The Prospectus has been authorized for use by the Department of
Financial Institutions. In addition, the Company has filed with the Federal
Reserve Bank of San Francisco ("FRB") a Form FRY-3 as required under the Bank
Holding Company Act of 1956, as amended ("BHCA") and Regulations thereunder (the
"Holding Company Application").
In connection with the Stock Conversion and pursuant to the terms of the
Plan as described in the prospectus, immediately following the consummation of
the Stock
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Conversion, subject to the approval of the members of the Company and the
stockholder of the Bank and compliance with certain conditions as may be imposed
by regulatory authorities, the Company will contribute up to 8% of the shares of
Common Stock sold in the Stock Conversion, not to exceed ________ shares, to a
charitable foundation (the "Foundation") (such shares hereinafter being referred
to as the "Foundation Shares").
Section 2. Retention of Xxxx; Compensation; Sale and Delivery of the
Shares. Subject to the terms and conditions herein set forth, the Company and
the Bank hereby appoint Xxxx (i) as their exclusive financial advisory and
marketing agent to utilize its best efforts to solicit subscriptions for Shares
of the Common Stock and to advise and assist the Company and the Bank with
respect to the Company's sale of the Shares in the Offering and (ii) to
participate in the Offering in the areas of market making, research coverage and
syndicate formation (if necessary).
On the basis of the representations, warranties, and agreements herein
contained, but subject to the terms and conditions herein set forth, Xxxx
accepts such appointment and agreed to consult with and advise the Company and
the Bank as to the matters set forth in the letter agreement ("Letter
Agreement"), dated April 9, 1999, between the Bank and Xxxx (a copy of which is
attached hereto as Exhibit A). It is acknowledged by the Company and the Bank
that Xxxx shall not be required to purchase any Shares and shall not be
obligated to take any action which is inconsistent with all applicable laws,
regulations, decisions or orders. In the event shares of Company Common Stock
remain after the Subscription Offering, Xxxx will seek to form a syndicate of
registered broker-dealers which are members of the National Association of
Securities Dealers, Inc. (the "NASD") to assist in the sale of the Common Stock
on a best efforts basis, subject to the terms and conditions set forth under a
selected dealers' agreement ("Selected Dealers' Agreement"), the form of which
is set forth as Exhibit B to this Agreement.
The obligations of Xxxx pursuant to this Agreement shall terminate upon the
completion or termination or abandonment of the Plan by the Company or upon
termination of the Offering, but in no event later than January 31, 2000 (the
"End Date"). All fees or expenses due to Xxxx but unpaid will be payable to Xxxx
in same day funds at the earlier of the Closing Date (as hereinafter defined) or
the End Date. In the event the Offering is extended beyond the End Date, the
Company, the Bank and Xxxx may agree to renew this Agreement under mutually
acceptable terms.
In the event the Company is unable to sell a minimum of 5,856,500 Shares
(or such lesser amount approved by the Washington Department of Financial
Institutions) within the period herein provided including any extension, this
Agreement shall terminate and the Company shall refund to any persons who have
subscribed for any of the Shares, the full amount which it may have received
from them plus accrued interest as set forth in the Prospectus; and none of the
parties to this Agreement shall have any obligation to the other parties
hereunder, except as otherwise set forth in this Section 2 and in Sections 6, 8
and 9 hereof.
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In the event the Offering is terminated for any reason not solely
attributable to the action or inaction of Xxxx, Xxxx shall be paid the fees and
expenses due to the date of such termination pursuant to subparagraphs (a) and
(d) below.
If all conditions precedent to the consummation of the Conversion,
including, without limitation, the sale of all Shares required by the Plan to be
sold, are satisfied, the Company agrees to issue, or have issued, the Shares
sold in the Offering and to release for delivery certificates for such Shares on
the Closing Date (as hereinafter defined) against payment to the Company by any
means authorized by the Plan: provided however, that no funds shall be released
to the Company until the conditions specified in Section 7 hereof shall have
been complied with to the reasonable satisfaction of Xxxx and its counsel. The
release of Shares against payment therefor shall be made at 10:00 a.m., Pacific
Time on a date and at a place acceptable to the Company, the Bank and Xxxx (it
being understood that such date shall not be more than ten business days after
the acceptance of the updated appraisal by the Department of Financial
Institutions and continued non objection of the FDIC) or such other time or
place as shall be agreed upon by the Company, the Bank and Xxxx. Certificates
for shares shall be delivered directly to the purchasers in accordance with
their directions. The date upon which the Company shall release or deliver, or
have released or delivered, the Shares sold in the Offering, in accordance with
the terms herein, is called the "Closing Date."
Xxxx shall receive from the Company the following compensation for their
services hereunder:
(a) Management Fee. A Management Fee of $25,000 payable in four
consecutive monthly installments of $6,250 commencing with the signing
of this letter. Such fees shall be deemed to have been earned when
due. Should the Conversion be terminated for any reason not
attributable to the action or inaction of Xxxx, Xxxx shall have earned
and be entitled to be paid fees accruing through the stage at which
point the termination occurred.
(b) Success Fee. A Success Fee of $715,000.00. The Management Fee
described in 7(a) will be applied against the Success Fee.
(c) If any shares of the Company's stock remain available after the
Subscription Offering, at the request of the Bank, Xxxx will seek to
form a syndicate of registered broker-dealers to assist in the sale of
such shares of Common Stock on a best efforts basis, subject to the
terms and conditions set forth in the Selected Dealers' Agreement.
Xxxx will endeavor to distribute the Common Stock among dealers in a
fashion which best meets the distribution objectives of the Bank and
the Plan of Conversion. Xxxx will be paid a fee not to exceed 5.5% of
the aggregate purchase price of the shares of Common Stock sold by
Xxxx and its syndicate. Xxxx will pass onto selected broker-dealers
who assist in the
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syndicated community an amount competitive with gross underwriting
discounts charged at such time for comparable amounts of stock sold at
a comparable price per share in a similar market environment. Fees
with respect to purchases affected with the assistance of a
broker/dealer shall be transmitted by Xxxx to such broker/dealer. The
decision to utilize selected broker-dealers will be made by the Bank
upon consultation with Xxxx. In the event, with respect to any stock
purchases, fees are paid pursuant to this subparagraph 2(c), such fees
shall be in lieu of, and not in addition to, payment pursuant to
subparagraphs 2(a) and 2(b).
(d) The Bank and the Company hereby agree to reimburse Xxxx, from time to
time upon Xxxx'x request, for its reasonable out-of-pocket expenses
and the reasonable fees and expenses of its counsel (such fees of
counsel, selected by Xxxx, will not be incurred without the prior
approval of the Bank and/or the Company). Such reimbursement of legal
fees, including expenses, shall not exceed $35,000. The Bank will bear
the expenses of the Offering customarily borne by issuers including,
without limitation, Department of Financial Institutions, FRB, FDIC,
the Commission, "Blue Sky," and NASD filing and registration fees; the
fees of the Bank's accountants, conversion agent, attorneys,
appraiser, transfer agent and registrar, printing, mailing and
marketing expenses associated with the Conversion.
Full payment of Xxxx'x actual and accountable expenses, advisory fees and
compensation shall be made in same day funds on the earlier of the Closing Date
or a determination by the Bank to terminate or abandon the Plan.
Xxxx will provide financial advisory assistance for a period of one year
following completion of the Conversion as set forth in the Letter Agreement.
Following this initial one-year term, if Xxxx and the Company wish to continue
the relationship, a fee will be negotiated and an agreement entered into at that
time. Except as provided in the Letter Agreement, nothing in this Agreement
shall require the Company and the Bank to obtain such financial advisory
services from Xxxx.
Section 3. Prospectus; Offering. The Shares are to be initially offered in
the Offering at the Purchase Price as defined and set forth on the cover page of
the Prospectus.
Section 4. Representations and Warranties. The Company and the Bank jointly
and severally represent and warrant to Xxxx on the date hereof as follows:
(a) The Registration Statement was declared effective by the
Commission on [August ___, 1999]. At the time the Registration Statement,
including the Prospectus contained therein (including any amendment or
supplement thereto), became effective, the Registration Statement complied
as to form in all material respects with the requirements of the 1933 Act,
the 1933 Act Regulations and the securities laws of all of
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the states registered therein. The Registration Statement, including the
Prospectus contained therein (including any amendment or supplement
thereto), and any information regarding the Company, the Bank or any of
their respective subsidiaries contained in Sales Information (as such term
is defined in Section 8 hereof) authorized by the Company, the Bank or any
of their respective subsidiaries for use in connection with the Offering,
did not contain an untrue or misleading statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, and at the time any Rule 424(b) or (c)
Prospectus was filed with the Commission; provided, however, that the
representations and warranties in this Section 4(a) shall not apply to
statements or omissions made in reliance upon and in conformity with
written information furnished to the Company or the Bank by Xxxx expressly
regarding Xxxx (or Xxxxx, Xxxxxxxx & Xxxxx, Inc.) for use in the Prospectus
under the captions ["Market for EverTrust Financial Group, Inc.'s Common
Stock"] and "Mutual Bancshares' Conversion" or statements in or omissions
from any Sales Information or information filed pursuant to state
securities or blue sky laws or regulations regarding Xxxx.
(b) The Conversion Application was approved by the Department of
Financial Institutions on [August ___, 1999], the FDIC issued a
non-objection letter to the Conversion Application dated [August ___, 1999]
and the Company received approval of its Holding Company Application on
[August ___, 1999]. At the time of the approval of the Conversion
Application, including the Prospectus (including any amendment or
supplement thereto), by the Department of Financial Institutions, and the
non-objection letter of the FDIC, the Conversion Application complied as to
form in all material respects with (i) the Conversion Regulations except to
the extent waived by the Department of Financial Institutions and (ii) the
Federal Deposit Insurance Act and Regulations thereunder. The Conversion
Application, including the Prospectus (including any amendment or
supplement thereto), and the Holding Company Application, do not include
any untrue or misleading statement of a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this Section 4(b) shall
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company or the Bank by
Xxxx expressly regarding Xxxx (or Xxxxx, Xxxxxxxx & Xxxxx, Inc.) for use in
the Prospectus contained in the Conversion Application under the captions
["Market for EverTrust Financial Inc.'s Common Stock"] and "Mutual
Bancshares' Conversion" or statements in or omissions from any sales
information or information filed pursuant to state securities or blue sky
laws or regulations regarding Xxxx.
(c) No order has been issued by the Department of Financial
Institutions, FDIC, FRB, the Commission or any other federal or state
regulatory authority preventing or suspending the use of the Prospectus and
no action by or before any such government entity to revoke any approval,
authorization or order of effectiveness related
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to the Conversion is pending or, to the best knowledge of the Company
and/or the Bank, threatened.
(d) No person has sought to obtain review of the final action of any
of the following: (i) the Department of Financial Institutions in approving
the Plan or in approving the Conversion pursuant to the Conversion
Regulations or regulations promulgated under Washington law; (ii) the
non-objection of the Conversion by the FDIC pursuant to the Federal
Department Insurance Corporation Act and Regulations promulgated
thereunder; or (iii) the FRB regarding the Holding Company Application
pursuant to the Regulations promulgated thereunder.
(e) The Bank and the Commercial Bank of Xxxxxxx (the "Commercial
Bank") have been organized and is a validly existing Washington
state-chartered savings bank in stock form of organization and a Washington
state-chartered commercial bank, respectively, in both instances the Bank
and the Commercial Bank duly authorized to conduct their business and own
their property as described in the Registration Statement and the
Prospectus; the Bank and the Commercial Bank have obtained all material
licenses, permits and other governmental authorizations currently required
for the conduct of their respective business; all such licenses, permits
and governmental authorizations are in full force and effect, and the Bank
and the Commercial Bank are in all material respects complying with all
laws, rules, regulations and orders applicable to the operation of its
business and are not a party to any proceeding or subject to any order or
directive of any regulatory agreement; the Bank and the Commercial Bank are
duly qualified as a foreign corporation to transact business and are in
good standing in each jurisdiction in which its ownership of property or
leasing of property or the conduct of their respective business requires
such qualification, unless the failure to be so qualified in one or more of
such jurisdictions would not have a material adverse effect on the
financial condition, or the business, operations or income of the Bank and
the Commercial Bank. The Bank and the Commercial Bank do not own equity
securities or any equity interest in any other business enterprise except
as described in the Prospectus. The Company owns all of the issued and
outstanding shares of capital stock of the Bank and the Commercial Bank.
(f) The Company has been duly organized and is a validly existing
Washington-chartered mutual holding company in good standing under the laws
of the State of Washington, and upon consummation of the Conversion the
Company will become a duly incorporated and validly existing corporation in
good standing under the laws of the State of Washington, and its
subsidiaries (except for the Bank and the Commercial Bank) have been duly
incorporated and are validly existing as corporations in good standing
under the laws of the State of Washington, and the Company and its
subsidiaries (except for the Bank and the Commercial Bank) have corporate
power and authority to own, lease and operate its properties and to conduct
their business as described in the Registration Statement and the
Prospectus, and the Company and its subsidiaries (except for the Bank and
the Commercial Bank) are qualified to do business as a foreign corporation
in each jurisdiction in which the conduct of their business requires such
qualification, except where the failure to so qualify would not
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have a material adverse effect on the financial condition, or the business,
operations or income of the Company and/or its subsidiaries. The Company
and its subsidiaries (except for the Bank and the Commercial Bank) have
obtained all material licenses, permits and other governmental
authorizations currently required for the conduct of their business and are
not a party to any proceeding or subject to any order or directive of any
regulatory agency; all such licenses, permits and governmental
authorizations are in full force and effect, and the Company and its
subsidiaries (except for the Bank and the Commercial Bank) are in all
material respects complying with all laws, rules, regulations and orders
applicable to the operation of their respective business.
(g) The Bank is a member of the Federal Home Loan Bank of Seattle
("FHLB-Seattle"). The deposit accounts of the Bank and the Commercial Bank
are insured by the FDIC up to the applicable limits; and no proceedings for
the termination or revocation of such insurance are pending or, to the best
knowledge of the Bank and the Commercial Bank, threatened.
(h) The Company, the Bank and their subsidiaries have good and
marketable title to all real property, personal property and other assets
material to the business of the Company and the Bank and to those
properties and assets described in the Registration Statement and
Prospectus as owned by them, free and clear of all liens, charges,
encumbrances or restrictions, except such as are described in the
Registration Statement and Prospectus or are not material to the business
of the Company and the Bank and their subsidiaries, taken as a whole; and
all of the leases and subleases material to the business of the Company,
the Bank and their subsidiaries under which the Company, the Bank or their
subsidiaries hold properties, including those described in the Registration
Statement and Prospectus, are in full force and effect.
(i) The Company and the Bank have received an opinion from Breyer &
Associates, PC, Washington, D.C. with respect to the federal tax
consequences of the Conversion and an opinion from Deloitte & Touche LLP,
Seattle, Washington, with respect to the Washington state tax consequences
of the Conversion; all material aspects of each of those tax opinions are
accurately summarized in the Prospectus; and the facts and representations
upon which such opinions are based are truthful, accurate and complete.
(j) The Company and the Bank have all such power, authority,
authorizations, approvals and orders as may be required to enter into this
Agreement, to carry out the provisions and conditions hereof and to (i)
issue and sell the Shares to be sold by the Company as provided herein and
as described in the Prospectus; and (ii) issue and contribute the
Foundation Shares, subject to the satisfaction of certain conditions
imposed by the Department of Financial Institutions, FDIC and the FRB in
connection with approvals of the Conversion, and except as may be required
under the securities, or "blue sky," laws of various jurisdictions and
except with respect to the approval of the FRB for the Company to control
the Bank and in the case of the Company, as of the Closing Date, will have
such approvals and orders to issue and sell
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the Shares to be sold by the Company as provided herein and approval of the
FRB to control the Bank.
(k) The Company, the Bank and their subsidiaries are not in violation
of any directive received from the Department of Financial Institutions,
the FDIC the FRB, or other state or federal regulatory agency to make any
material change in the method of conducting their businesses so as to
comply in all material respects with all applicable statutes and
regulations (including, without limitation, regulations, decisions,
directives and orders of the Department of Financial Institutions, the
FDIC, the FRB, or such other federal or state regulatory agency), and,
except as set forth in the Registration Statement and the Prospectus, there
is no suit or proceeding or charge or action before or by any court,
regulatory authority or governmental agency or body, pending or threatened,
which would materially and adversely affect the Conversion, the performance
of this Agreement or the consummation of the transactions contemplated in
the Plan and as described in the Registration Statement and the Prospectus
or which would result in any material adverse change in the financial
condition, earnings, capital or properties of the Company, and/or the Bank.
(l) The consolidated financial statements which are included in the
Prospectus fairly present the financial condition, results of operations,
retained earnings and cash flows of the Company, the Bank and their
subsidiaries at the respective dates thereof and for the respective periods
covered thereby and comply in all material respects with the applicable
accounting requirements of the Regulations of the Commission, Title 12 of
the Code of Federal Regulations, and generally accepted accounting
principles consistently applied through the periods involved except as
noted therein. Such financial statements are consistent with the most
recent financial statements and other reports filed by the Company, the
Bank and their subsidiaries with the Division of Financial Institutions,
FDIC, FRB, and the Commission except that accounting principles employed in
such regulatory filings conform to the requirements of such authorities and
not necessarily to generally accepted accounting principles. The other
financial, statistical and pro forma information and related notes (except
the appraisal data) included in the Prospectus present fairly the
information shown therein on a basis consistent with the audited and
unaudited consolidated financial statements of the Company, Bank and their
subsidiaries included in the Prospectus, and as to the pro forma
adjustments, the adjustments made therein have been properly applied on the
basis described therein.
(m) Since the respective dates as of which information is given in the
Registration Statement and the Prospectus: (i) there has not been any
material adverse change, in the financial condition of the Company, the
Bank or their subsidiaries considered as on enterprise or in the earnings,
capital or properties of the Company, the Bank or their subsidiaries,
whether or not arising in the ordinary course of business; (ii) there has
been no incurrence of any material long-term debt by the Company, the Bank
or their subsidiaries or any material increase in loans past due 90 days or
more or real estate acquired by foreclosure, by deed-in-lieu of foreclosure
or deemed in-substance foreclosure or any material decrease in surplus and
reserves or total assets of the
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Company, the Bank or any subsidiaries, nor has the Company or the Bank or
any subsidiaries issued any securities (other than as contemplated by this
Agreement) or incurred any liability or obligation for borrowing other than
in the ordinary course of business and (iii) there have not been any
material transactions entered into by the Company, the Bank or any
subsidiaries, except with respect to those transactions entered into in the
ordinary course of business.
(n) The capitalization, liabilities, assets, properties and business
of the Company and the Bank conform in all material respects to the
descriptions thereof contained in the Prospectus.
(o) All of the loans represented as assets of the Bank and the
Commercial Bank as of the most recent date for which financial condition
data is included in the Prospectus meet or are exempt from all requirements
of federal, state or local law pertaining to lending, including without
limitation truth in lending (including the requirements of Regulation Z and
12 C.F.R. Part 226), real estate settlement procedures, consumer credit
protection, equal credit opportunity and all disclosure laws applicable to
such loans, except for violations which, if asserted, could not have a
material adverse effect.
(p) Neither the Company, the Bank nor any of their subsidiaries have
any material contingent liabilities, except as set forth in the Prospectus.
(q) There are no actions, suits, regulatory investigations or other
proceedings pending or, to the best knowledge of the Company or the Bank,
threatened against the Company, the Bank and/or any of their subsidiaries
relating to environmental protection. No disposal, release or discharge of
hazardous or toxic substances, pollutants or contaminants, including
petroleum and gas products, as any of such terms may be defined under
federal, state or local law, has been caused by the Company,the Bank and/or
any of their subsidiaries or, except as disclosed in the Prospectus, has
occurred on, in or at any of the facilities or properties owned or leased
by the Company, the Bank and/or any of their subsidiaries or on any
properties pledged to the Company, the Bank or any of their subsidiaries as
security for any indebtedness, except such disposal, release or discharge
as would not have a material adverse effect.
(r) As of the date hereof, neither the Company, the Bank nor any of
their subsidiaries are in violation of its articles of incorporation or
bylaws or charter or bylaws, as applicable (and the Company will not be in
violation of its articles of incorporation or bylaws in stock form at the
time of consummation of the Conversion), or in default in the performance
or observance of any material obligation, agreement, covenant, or condition
contained in any material contract, lease, loan agreement, indenture or
other instrument to which it is a party or by which it or any other
instrument to which it is a party or by which it or any of its property may
be bound.
(s) At the Closing Date, the Foundation will have been duly
incorporated and will be validly existing as a non profit corporation in
good standing under the laws of the
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State of Washington with corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus; the Foundation will not be a bank holding company within the
meaning of the BHCA as a result of the issuance of the Foundation Shares to
it in accordance with the terms of the Plan and in the amounts as described
in the Prospectus; to the best knowledge of the Company and the Bank, all
approvals required to establish the Foundation and to contribute the
Foundation Shares have been performed as described in the Prospectus;
except as specifically disclosed in the Prospectus, there are no agreements
and/or understandings, written or oral or otherwise, between the Company
and/or the Bank and the Foundation with respect to the control, directly or
indirectly, over the voting and the acquisition or disposition of the
shares of Common Stock to be contributed by the Company to the Foundation,
except that, unless waived by the FDIC, such shares must be voted in the
same ratio as all other shares of the Company are voted on each and every
proposal considered by the stockholders of the Company.
(t) The consummation of the Conversion, the execution, delivery and
performance of this Agreement and the consummation of the transactions
herein contemplated hereby and all actions in connection with the
contribution to the Foundation contemplated by the Plan have been duly and
validly authorized by all necessary corporate action on the part of the
Company and the Bank and this Agreement has been validly executed and
delivered by the Company and the Bank and, assuming valid execution and
delivery by Xxxx, is the valid, legal and binding Agreement of the Company
and the Bank that is enforceable in accordance with its terms, except as
the enforceability thereof may be limited by (i) state or federal
bankruptcy and insolvency proceedings and judgments, moratorium,
conservatorship, receivership or other similar laws now or hereafter in
effect relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of state savings associations and
their holding companies, (ii) laws relating to the safety and soundness of
insured depository institutions, and (iii) applicable law (including
Section 23A of the Federal Reserve Act, as amended) or public policy with
respect to the indemnification and/or contribution provisions contained
herein, and except that no representation or warranty need be made as to
the effect or availability of equitable remedies or injunctive relief
(regardless of whether such enforceability is considered in a proceeding in
equity or at law). The consummation of the transaction herein contemplated
will not: (a) conflict with or constitute a breach of, or default under,
the articles of incorporation and bylaws of the Company (in either mutual
or stock form) or the charter and bylaws of the Bank, or any material
contract, lease or other instrument to which the Company or the Bank is a
party, or any applicable law, rule, regulation or order to which the
Company or the Bank is subject; (b) violate any authorization, approval,
judgement, decree, order, statute, rule or regulation applicable to the
Company or the Bank, except for such violation which would not have a
material adverse effect on the financial condition and results of
operations of the Company, the Bank and their subsidiaries on a
consolidated basis; or (c) with the exception of the liquidation account
established in the Conversion, result in the creation of any material lien,
charge or encumbrance upon any property of the Company, the Bank and their
subsidiaries.
- 11 -
(u) No default exists, and no event has occurred which with notice or
lapse of time, or both, would constitute a default on the part of the
Company, the Bank and/or any of their subsidiaries, in the due performance
and observance of any term, covenant or condition of any indenture,
mortgage, deed of trust, note, bank loan, FHLB advance, or credit agreement
or any other instrument of agreement to which the Company, the Bank and/or
any of their subsidiaries are a party or by which any of them or any of
their property is bound or affected except such defaults which would not
have a material adverse effect on the financial condition or results of
operations of the Company, the Bank and/or any of their subsidiaries on a
consolidated basis; such agreements are in full force and effect; and no
other party to any such agreements has instituted or, to the best knowledge
of the Company and the Bank, threatened any action or proceeding wherein
the Company or the Bank would be alleged to be in default thereunder under
circumstances where such action or proceeding, if determined adversely to
the Company, or the Bank and/or any of their subsidiaries would have a
material adverse effect on the Company, and/or the Bank, taken as a whole.
(v) Upon consummation of the Conversion, the authorized, issued and
outstanding equity capital of the Company will be at or within the range
set forth in the Prospectus (except as otherwise provided in the
Prospectus), under the caption "Capitalization," and no shares of Common
Stock have been or will be issued and outstanding prior to (except as
otherwise provided in the Prospectus), the Closing Date referred to in
Section 2; the Shares and Foundation Shares will have been duly and validly
authorized for issuance and, when issued and delivered by the Company
pursuant to the Plan against payment of the consideration calculated as set
forth in the Plan and in the Prospectus, will be duly and validly issued,
fully paid and non-assessable; without preemptive rights with respect to
the Shares (except for subscription rights granted under the Plan); and the
terms and provisions of the Shares conform in all material respects to the
description thereof contained in the Registration Statement and the
Prospectus. Upon the issuance of the Shares, good title to the Shares will
be transferred from the Company to the purchasers thereof against payment
therefor, subject to such claims as may be asserted against the purchasers
thereof by third-party claimants.
(w) The Company, the Bank and the Commercial Bank are not required to
obtain any approval of any regulatory or supervisory or other public
authority in connection with the execution and delivery of this Agreement
or the issuance of the Shares, except for the approval of the Commission,
the FDIC, FRB, and Department of Financial Institutions and any necessary
qualification, notification, registration or exemption under the securities
or blue sky laws of the various states in which the Shares are to be
offered, and except as may be required under the rules and regulations of
the NASD and/or the Nasdaq National Market.
(x) Deloitte & Touche, LLP, which has certified the financial
statements of the Bank included in the Prospectus as of March 31, 1999,
1998 and 1997, has advised the Company and the Bank in writing that they
are, with respect to the Company and the Bank, independent public
accountants within the meaning of the Code of Professional
- 12 -
Ethics of the American Institute of Certified Public Accountants and Title
12 of the Code of Federal Regulations.
(y) RP Financial, LC, which has prepared the Bank's Conversion
Valuation Appraisal Report as of May 28, 1999 (as amended or supplemented,
if so amended or supplemented) (the "Appraisal"), has advised the Company
and the Bank in writing that it is independent of the Company and the Bank
within the meaning of the Washington and FDIC Conversion Regulations.
(z) The Company and the Bank have timely filed all required federal,
state and local tax returns for each of the past five years; the Company
and the Bank have paid all taxes that have become due and payable in
respect of such returns, except where permitted to be extended; to the best
knowledge of the Company and the Bank adequate reserves have been made for
similar future tax liabilities and to the actual knowledge of the Company
and the Bank no deficiency has been asserted with respect thereto by any
taxing authority.
(aa) The Company and the Bank are in compliance in all material
respects with the applicable financial recordkeeping and reporting
requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, and the regulations and rules thereunder.
(bb) To the knowledge of the Company and the Bank, neither the Company
(except for the loan to the ESOP), the Bank nor employees of the Company or
the Bank nor any subsidiary or employees of such subsidiary have made any
payment of funds of the Company or the Bank as a loan for the purchase of
the Shares.
(cc) Prior to the Conversion, the Company was not authorized to issue
shares of capital stock and neither the Company nor the Bank has: (i)
issued any securities within the last 18 months (except for notes to
evidence other bank loans and reverse repurchase agreements or other
liabilities in the ordinary course of business or as described in the
Prospectus); (ii) had any material dealings within the 12 months prior to
the date hereof with any member of the NASD, or any person related to or
associated with such member, other than discussions and meetings relating
to the proposed Offering and routine purchases and sales of United States
government and agency securities; (iii) entered into a financial or
management consulting agreement except as contemplated hereunder and except
for the Letter Agreement set forth in Exhibit A; and (iv) engaged any
intermediary between Xxxx and the Company and the Bank in connection with
the offering of the Shares, and no person is being compensated in any
manner for such service.
(dd) The Company and the Bank have not relied upon Xxxx or Xxxx'x
counsel for any legal, tax or accounting advice in connection with the
Conversion.
(ee) The Company is not required to be registered under the Investment
Company Act of 1940, as amended.
- 13 -
Any certificates signed by an officer of the Company or the Bank pursuant
to the conditions of this Agreement and delivered to Xxxx or its counsel that
refers to this Agreement shall be deemed to be a representation and warranty by
the Company and/or the Bank to Xxxx as to the matters covered thereby with the
same effect as if such representation and warranty were set forth herein.
Section 5. Representations and Warranties of Xxxx.
(a) Xxxx represents and warrants to the Company and the Bank that:
(i) Xxxx is a corporation and is validly existing in good
standing under the laws of the State of Ohio with full power and
authority to provide the services to be furnished to the Bank and the
Company hereunder.
(ii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
and validly authorized by all necessary action on the part of Xxxx,
and this Agreement has been duly and validly executed and delivered by
Xxxx and is the legal, valid and binding agreement of Xxxx,
enforceable in accordance with its terms.
(iii) Each of Xxxx and its employees, agents and representatives
who shall perform any of the services hereunder shall be duly
authorized and empowered, and shall have all licenses, approvals and
permits necessary to perform such services.
(iv) The execution and delivery of this Agreement by Xxxx, the
consummation of the transactions contemplated hereby and compliance
with the terms and provisions hereof will not conflict with, or result
in a breach of, any of the terms, provisions or conditions of, or
constitute a default (or event which with notice or lapse of time or
both would constitute a default) under, the articles of incorporation
of Xxxx or any agreement, indenture or other instrument to which Xxxx
is a party or by which it or its property is bound.
(v) No approval of any regulatory or supervisory or other public
authority is required in connection with Xxxx'x execution and delivery
of this Agreement, except for the approval of the National Association
of Securities Dealers or as may have been received.
(vi) There is no suit or proceeding or charge or action before or
by any court, regulatory authority or government agency or body or, to
the best knowledge of Xxxx, pending or threatened, which might
materially adversely affect Xxxx'x performance under this Agreement.
Section 5.1 Covenants of the Company and the Bank. The Company and the Bank
hereby jointly and severally covenant with Xxxx as follows:
- 14 -
(a) The Company will not, at any time after the date the Registration
Statement is declared effective, file any amendment or supplement to the
Registration Statement without providing Xxxx and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement Xxxx or its counsel shall
reasonably object.
(b) The Bank will not, at any time after the Conversion Application is
approved by the Department of Financial Institutions, file any amendment or
supplement to such Conversion Application without providing Xxxx and its
counsel an opportunity to review such amendment or supplement or file any
amendment or supplement to which amendment or supplement Xxxx or its
counsel shall reasonably object.
(c) The Bank will not at any time after the non-objection letter is
received from the FDIC, file any amendment or supplement with the FDIC
without providing Xxxx and its counsel an opportunity to review such
amendment or supplement or file any amendment or supplement which amendment
or supplement Xxxx or its counsel shall reasonably object.
(d) The Company will not, at any time before the Holding Company
Application is approved by the FRB, file any amendment or supplement to
such Holding Company Application without providing Xxxx and its counsel an
opportunity to review such amendment or supplement or file any amendment or
supplement to which amendment or supplement Xxxx or its counsel shall
reasonably object. The Company and the Bank will not consummate the
Conversion prior to the approval of the Holding Company Application by the
FRB.
(e) The Company and the Bank will use their best efforts to cause any
post-effective amendment to the Registration Statement to be declared
effective by the Commission and any post-effective amendment to the
Conversion Application to be approved by the Department of Financial
Securities and will immediately upon receipt of any information concerning
the events listed below notify Xxxx: (i) when the Registration Statement,
as amended, has become effective; (ii) when the Conversion Application, as
amended, has been approved by the Department of Financial Securities; (iii)
when the Holding Company Application, as amended, has been approved by the
FRB; (iv) the receipt of the non-objection letter from the FDIC; (v) of any
comments, written or oral, and other correspondence from the Commission,
the Department of Financial Securities, FRB, FDIC or any other governmental
entity with respect to the Conversion or the transactions contemplated by
this Agreement; (vi) of the request by the Commission, the Department of
Financial Securities, FRB or any other governmental entity for any
amendment or supplement to the Registration Statement, the Conversion
Application or the Holding Company Application or for additional
information; (vii) of the issuance by the Commission, the Department of
Financial Securities, FRB, FDIC or any other governmental entity of any
order or other action suspending the Offering or the use of the
Registration Statement or the Prospectus or any other filing of the Company
or the Bank under the Conversion Regulations, or other applicable law, or
the threat of any such action; (viii) the issuance by the Commission,
- 15 -
the Department of Financial Securities, FRB, FDIC or any state authority of
any stop order suspending the effectiveness of the Registration Statement
or the approval of the Conversion Application or Holding Company
Application, or of the initiation or threat of initiation or threat of any
proceedings for any such purpose; or (ix) of the occurrence of any event
mentioned in paragraph (h) below. The Company and the Bank will make every
reasonable effort (a) to prevent the issuance by the Commission, the
Department of Financial Securities, FRB, FDIC or any state authority of any
such order and, if any such order shall at any time be issued, (b) to
obtain the lifting thereof at the earliest possible time.
(f) The Company and the Bank will deliver to Xxxx and to its counsel
two manually executed and two conformed copies of the Registration
Statement, the Conversion Application and the Holding Company Application,
as originally filed and of each amendment or supplement thereto, including
all exhibits. Further, the Company and the Bank will deliver such
additional copies of the foregoing documents to counsel to Xxxx as may be
required for any NASD filings.
(g) The Company and the Bank will furnish to Xxxx, from time to time
during the period when the Prospectus (or any later prospectus related to
this offering) is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934, (the "1934 Act"), such number of copies of
such Prospectus (as amended or supplemented) as Xxxx may reasonably request
for the purposes contemplated by the 1933 Act, the 1933 Act Regulations,
the 1934 Act or the rules and regulations promulgated under the 1934 Act
(the "1934 Act Regulations"). The Company authorizes Xxxx to use the
Prospectus (as amended or supplemented, if amended or supplemented) in any
lawful manner contemplated by the Plan in connection with the sale of the
Shares by Xxxx.
(h) The Company and the Bank will comply with any and all material
terms, conditions, requirements and provisions with respect to the
Conversion imposed by the Commission, the Department of Financial
Securities, FDIC, FRB, the Conversion Regulations, and by the 1933 Act, the
1933 Act Regulations, the 1934 Act and the 1934 Act Regulations to be
complied with prior to or subsequent to the Closing Date.
(i) If, at any time during the period when the Prospectus relating to
the Shares is required to be delivered, any event relating to or affecting
the Company or the Bank shall occur, as a result of which it is necessary
or appropriate, in the opinion of counsel for the Company and the Bank to
amend or supplement the Registration Statement or Prospectus in order to
make the Registration Statement or Prospectus not misleading in light of
the circumstances existing at the time the Prospectus is delivered to a
purchaser, the Company and the Bank will, at their expense, prepare and
file with the Commission, the Department of Financial Institutions, FDIC,
FRB and furnish to Xxxx a reasonable number of copies of an amendment or
amendments of, or a supplement or supplements to, the Registration
Statement and Prospectus (in form and substance satisfactory to Xxxx and
its counsel after a reasonable time for review) which will amend or
supplement the Registration Statement and Prospectus so that as
- 16 -
amended or supplemented it will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in light of the circumstances existing at the time
the Prospectus is delivered to a purchaser, not misleading. The Company and
the Bank will notify Xxxx of the reason for any amendment and have the
consent of Xxxx prior to filing any such amendment. For the purpose of this
Agreement, the Company and the Bank each will timely furnish to Xxxx such
information with respect to itself as Xxxx may from time to time reasonably
request.
(k) At the Closing Date referred to in Section 2, the Plan will have
been adopted by the Boards of Directors of both the Company and the Bank
and the offer and sale of the Shares will have been conducted in all
material respects in accordance with the Plan, the Conversion Regulations,
and all other applicable laws, regulations, decisions and orders, including
all terms, conditions, requirements and provisions precedent to the
Conversion imposed upon the Company or the Bank by the Department of
Financial Institutions, the Commission, FRB, FDIC or any other regulatory
authority and in the manner described in the Prospectus.
(l) Upon completion of the sale by the Company of the Shares
contemplated by the Prospectus, (i) the Company will be converted pursuant
to the Plan to a Washington stock corporation, and (ii) the Company will
have no direct subsidiaries other than the Bank and the Commercial Bank of
Xxxxxxx, I-Pro, Inc. and Mutual Bancshares Capital, Inc. The Conversion
will have been effected in all material respects in accordance with all
applicable statutes, regulations, decisions and orders; and, except with
respect to the filing of certain post-sale, post-Conversion reports, and
documents in compliance with the 1933 Act Regulations or the Department of
Financial Institutions' and FRB's letters of approval, the FDIC's
non-objection, all terms, conditions, requirements and provisions with
respect to the Conversion (except those that are conditions subsequent)
imposed by the Commission, the Department of Financial Institutions, FRB
and FDIC, if any, will have been complied with by the Company and the Bank
in all material respects and/or all appropriate waivers will have been
obtained and all material notice and waiting periods will have been
satisfied, waived or elapsed.
(m) The Company and the Bank will take all necessary actions, in
cooperation with Xxxx, and furnish to whomever Xxxx, the Company and the
Bank may mutually agree, such information as may be required to qualify or
register the Shares for offering and sale by the Company or to exempt such
Shares from registration, or to exempt the Company as a broker-dealer and
its officers, directors and employees as broker-dealers or agents under the
applicable securities or blue sky laws of such jurisdictions in which the
Shares are to be offered and sold as Xxxx and the Company and the Bank may
reasonably agree upon; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify
to do business in any jurisdiction in which it is not so qualified. In each
jurisdiction where any of the Shares shall have been qualified or
registered as above provided, the Company will make and
- 17 -
file such statements and reports in each fiscal period as are or may be
required by the laws of such jurisdiction.
(n) The liquidation account for the benefit of Eligible Account
Holders and Supplemental Eligible Account Holders will be duly established
and maintained in accordance with the requirements of the Department of
Financial Institutions and FDIC, and such Eligible Account Holders and
Supplemental Eligible Account Holders who continue to maintain their
savings accounts in the Bank will have an inchoate interest in their pro
rata portion of the liquidation account which shall have a priority
superior to that of the holders of shares of Common Stock in the event of a
complete liquidation of the Bank.
(o) The Company and the Bank will not sell or issue, contract to sell
or otherwise dispose of, for a period of [90] days after the Closing Date,
without Xxxx'x prior written consent, any shares of Common Stock other than
the Shares or other than in connection with any plan or arrangement
described in the Prospectus.
(p) The Company has registered its Common Stock under Section 12(g) of
the 1934 Act concurrent with the Offering pursuant to the Plan and such
registration became effective concurrent with the effectiveness of the
Registration Statement. The Company shall maintain the effectiveness of
such registration for not less than three (3) years or such shorter period
as may be required by the Department of Financial Institutions and FDIC.
(q) During the period during which the Company's Common Stock is
registered under the 1934 Act or for three years from the date hereof,
whichever period is greater, the Company will furnish to its stockholders
as soon as practicable after the end of each fiscal year an annual report
of the Company (including a consolidated balance sheet and statements of
consolidated income, stockholders' equity and cash flows of the Company and
its subsidiaries as at the end of and for such year, certified by
independent public accountants in accordance with Regulation S-X under the
1933 Act and the 1934 Act).
(r) During the period of three years from the date hereof, the Company
will furnish to Xxxx: (i) as soon as practicable after such information is
publicly available, a copy of each report of the Company furnished to or
filed with the Commission under the 1934 Act or any national securities
exchange or system on which any class of securities of the Company is
listed or quoted (including, but not limited to, reports on Forms 10-K,
10-Q and 8-K and all proxy statements and annual reports to stockholders),
(ii) a copy of each other non-confidential report of the Company mailed to
its stockholders or filed with the Commission, the Department of Financial
Institutions, FRB, FDIC or any other supervisory or regulatory authority or
any national securities exchange, association, or system on which any class
of securities of the Company is listed or quoted, each press release and
material news items and additional documents and information with respect
to the Company or the Bank as Xxxx may reasonably request; and (iii) from
time to
- 18 -
time, such other nonconfidential information concerning the Company or the
Bank as Xxxx may reasonably request.
(s) The Company and the Bank will use the net proceeds from the sale
of the Shares in the manner set forth in the Prospectus under the caption
"How EverTrust Financial Group, Inc. Intends to Use the Conversion Offering
Proceeds."
(t) Other than as permitted by the Conversion Regulations, the BHCA
and Regulations thereunder, Federal Deposit Insurance Act and Regulations
thereunder, the 1933 Act, the 1933 Act Regulations, and the laws of any
state in which the Shares are registered or qualified for sale or exempt
from registration, neither the Company nor the Bank will distribute any
prospectus, offering circular or other offering material in connection with
the offer and sale of the Shares.
(u) The Company will use its best efforts to (i) encourage and assist
four market makers to establish and maintain a market for the Shares and
(ii) list the Shares through the Nasdaq National Market, OTC Bulletin Board
or the National Daily Quotations System "Pink Sheets" published by the
National Quotation Bureau, Inc. effective on or prior to the Closing Date.
(v) The Bank will maintain appropriate arrangements for depositing all
funds received from persons mailing subscriptions for or orders to purchase
Shares in the Offering on an interest bearing basis at the rate described
in the Prospectus until the Closing Date and satisfaction of all conditions
precedent to the release of the Bank's obligation to refund payments
received from persons subscribing for or ordering Shares in the Offering in
accordance with the Plan and as described in the Prospectus or until
refunds of such funds have been made to the persons entitled thereto or
withdrawal authorizations cancelled in accordance with the Plan and as
described in the Prospectus. The Bank will maintain such records of all
funds received to permit the funds of each subscriber to be separately
insuredby the FDIC (to the maximum extent allowable) and to enable the Bank
to make the appropriate refunds of such funds in the event that such
refunds are required to be made in accordance with the Plan and as
described in the Prospectus.
(w) Prior to the Closing Date, the Holding Company Application shall
have been approved by the FRB. The company will file all necessary forms
and applications under the FRB as is required under the BHCA and
Regulations promulgated thereunder.
(x) The Company and the Bank will take such actions and furnish such
information as are reasonably requested by Xxxx in order for Xxxx to ensure
compliance with the NASD's "Interpretation Relating to Free Riding and
Withholding."
(y) The Bank will not amend the Plan without notifying Xxxx prior
thereto.
- 19 -
(z) The Company shall assist Xxxx, if necessary, in connection with
the allocation of the Shares in the event of an oversubscription and shall
provide Xxxx with any information necessary in allocating the Shares in
such event.
(aa) Prior to the Closing Date, the Company and the Bank will inform
Xxxx of any event or circumstances of which it is aware as a result of
which the Registration Statement, the Conversion Application and/or
Prospectus, as then amended or supplemented, would contain an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading.
(bb) The Company shall make generally available to its
securityholders, in the manner contemplated by Rule 158(b) under the
Securities Act, as soon as practicable but in any event not later than 60
days after the end of its fiscal quarter in which the first anniversary
date of the effective date of the Registration Statement occurs, an earning
statement which will comply with Section 11(a) of the Securities Act
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement.
Section 5.2 Covenants of Xxxx. Xxxx hereby covenants with the Company and
the Bank as follows:
(a) During the period when the Prospectus is used, Xxxx will comply,
in all material respects and at its own expense, with all requirements
imposed upon it by the Department of Financial Institutions, FRB, FDIC and
the NASD and, to the extent applicable, by the 1933 Act and the 1934 Act
and the rules and regulations promulgated thereunder.
(b) Xxxx will distribute copies of the Prospectus and Sales
Information in connection with the sales of the common stock only in
accordance with the rules and regulations of the NASD, the Department of
Financial Institutions, FRB and FDIC, as well as, the 1933 Act and the
rules and regulations promulgated thereunder.
(c) Xxxx shall assist the Bank in maintaining arrangements for the
deposit of funds and the making of refunds, as appropriate (as described in
Section 5.1(t)), and shall perform the allocation of shares in the event of
an oversubscription, in conformance with the Plan and applicable
regulations and based upon information furnished to Xxxx by the Bank (as
described in Section 5.1).
Section 6. Payment of Expenses. Whether or not the Conversion is completed
or the sale of the Shares by the Company is consummated, the Company and the
Bank jointly and severally agree to pay or reimburse Xxxx for: (a) all filing
fees in connection with all filings with the NASD; (b) any stock issue or
transfer taxes which may be payable with respect to the sale of the Shares; (c)
all reasonable expenses of the Conversion, including but not limited to,
transfer agent, registrar and other agent charges, fees relating to auditing and
accounting or other advisors and costs of printing all documents necessary in
connection with the Conversion; and (d) all other
- 20 -
"reasonable expenses" incurred by Xxxx. Such "reasonable expenses" include, but
are not limited to, travel, communications and postage and reasonable fees of
counsel. In the event the Company is unable to sell a minimum of 5,856,500 or
the Conversion is terminated or otherwise abandoned, the Company and the Bank
shall reimburse Xxxx in accordance with Section 2 hereof.
Section 7. Conditions to Xxxx'x Obligations. Xxxx'x obligations hereunder,
as to the Shares to be issued at the Closing Date, are subject, to the extent
not waived by Xxxx, to the condition that all representations and warranties of
the Company and the Bank herein are, at and as of the commencement of the
Offering and at and as of the Closing Date, true and correct in all material
respects, the condition that the Company and the Bank shall have performed all
of their obligations hereunder to be performed on or before such dates, and to
the following further conditions:
(a) At the Closing Date, the Company and the Bank shall have conducted
the Conversion in all material respects in accordance with the Plan, the
Conversion Regulations, and all other applicable laws, regulations,
decisions and orders, including all terms, conditions, requirements and
provisions precedent to the Conversion imposed upon them by the Department
of Financial Institutions, FRB, FDIC and state securities law regulators.
(b) The Registration Statement shall have been declared effective by
the Commission, the Conversion Application approved by the Department of
Financial Institutions, non-objection from the FDIC received, and the
Holding Company Application approved by the FRB not later than 5:30 p.m. on
the date of this Agreement, or with Xxxx'x consent at a later time and
date; and at the Closing Date, no stop order suspending the effectiveness
of the Registration Statement shall have been issued under the 1933 Act or
proceedings therefore initiated or threatened by the Commission, or any
state authority and no order or other action suspending the authorization
of the Prospectus or the consummation of the Conversion shall have been
issued or proceedings therefore initiated or threatened by the Commission,
the Department of Financial Institutions, FRB, FDIC or any state authority.
(c) At the Closing Date, Xxxx shall have received:
(1) The favorable opinion, dated as of the Closing Date and
addressed to Xxxx and for its benefit, of Breyer & Associates, PC,
special counsel for the Company and the Bank, in form and substance to
the effect that:
(i) The Company has been duly organized and is validly
existing as a mutual holding company in good standing under the
laws of the State of Washington, and upon consummation of the
Conversion will become a duly incorporated and validly existing
corporation in good standing under the laws of the State of
Washington, and its subsidiaries (except for the Bank and the
Commercial Bank) have been duly incorporated and are validly
existing as corporations in good standing under the laws of the
State of Washington and all jurisdictions they do
- 21 -
business in, and the Company and its subsidiaries (except for the
Bank and the Commercial Bank) have corporate power and authority
to own, lease and operate their properties and to conduct its
business as described in the Registration Statement and the
Prospectus.
(ii) The Bank and the Commercial Bank are organized and are
validly existing as a state-chartered savings bank in stock form
of organization and as a state-chartered commercial bank,
respectively, in both instances duly authorized to conduct their
business and own property as described in the Registration
Statement and Prospectus. All of the outstanding capital stock of
the Bank and the Commercial Bank has been duly authorized and is
validly issued, fully paid and non-assessable and owned by the
Company, free and clear of any liens, encumbrances, claims or
other restrictions.
(iii) all of the leases and subleases material to the
business of the Company, the Bank and their subsidiaries under
which the Company, the Bank and their subsidiaries hold
properties, as described in the Registration Statement and
Prospectus, are in full force and effect.
(iv) the Bank and the Commercial Bank are duly qualified to
transact business in each jurisdiction in which their ownership
of property or leasing of property or the conduct of their
business requires such qualification, unless the failure to be so
qualified in one or more of such jurisdictions would not have a
material adverse effect on the financial condition, or the
business, operations or income of the Bank or the Commercial
Bank.
(v) the Company, the Bank and their subsidiaries have good
and marketable title to all properties and assets which are
material to the business of the Company, the Bank and their
subsidiaries and to those properties and assets described in the
Registration Statement and Prospectus, as owned by them, free and
clear of all liens, charges, encumbrances or restrictions, except
such as are described in the Registration Statement and
Prospectus, or are not material in relation to the business of
the Company, the Bank and their subsidiaries considered as one
enterprise.
(vi) The Bank is a member of the FHLB-Seattle. The Bank and
the Commercial Bank are insured depository institutions under the
provisions of Section 4(a) of the Federal Deposit Insurance Act,
as amended, and no proceedings for the termination or revocation
of such insurance are pending or, to such counsel's Actual
Knowledge threatened; the description of the liquidation account
as set forth in the Prospectus under the caption "Mutual
Bancshares' Conversion--Effects of Conversion to Stock Form on
Depositors and Borrowers of Xxxxxxx Mutual-Liquidation Account,"
to the extent that such information constitutes matters of law
and legal conclusions, has been reviewed by such counsel and is
accurate in all material respects.
(vii) Upon consummation of the Conversion, the authorized,
issued and outstanding capital stock of the Company will be
within the range set forth in
- 22 -
the Prospectus under the caption "Capitalization," and no shares
of Common Stock have been issued prior to the Closing Date; at
the time of the Conversion, the Shares to be sold in the Offering
and to be issued to the Foundation will have been duly and
validly authorized for issuance, and when issued and delivered by
the Company pursuant to the Plan against payment of the
consideration as set forth in the Plan and the Prospectus, will
be duly and validly issued and fully paid and non-assessable;
except for subscription rights granted pursuant to the Plan, the
issuance of the Shares is not subject to statutory preemptive
rights and the terms and provisions of the Shares conform in all
material respects to the description thereof contained in the
Prospectus and with all requirements of federal and state law. To
such counsel's Actual Knowledge, upon the issuance of the Shares,
good title to the Shares will be transferred from the Company to
the purchasers thereof against payment therefor, subject to such
claims as may be asserted against the purchasers thereof by
third-party claimants.
(viii) The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been
duly and validly authorized by all necessary corporate action on
the part of the Company and the Bank; and this Agreement is a
valid and binding obligation of the Company and the Bank,
enforceable in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy,
insolvency, moratorium, reorganization, conservatorship,
receivership or other similar laws now or hereafter in effect
relating to or affecting the enforcement of creditors' rights
generally or the rights of creditors of savings associations and
their holding companies, (ii) general principles of equity, (iii)
laws relating to the safety and soundness of insured depository
institutions, and (iv) applicable law or public policy with
respect to the indemnification and/or contribution provisions
contained herein, and except that no opinion need to be expressed
as to the effect or availability of equitable remedies or
injunctive relief (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ix) The Conversion Application has been approved by the
Department of Financial Institutions, the FDIC has issued a
non-objection letter, the Prospectus has been authorized for use
by the Department of Financial Institutions, FDIC, FRB and the
Commission and the contribution of the Foundation Shares to the
Foundation has been approved by the Department of Financial
Institutions and the FDIC. The FRB has approved the Holding
Company Application and issued its letter of approval under the
BHCA, and no action has been taken or is pending, and to such
counsel's Actual Knowledge, or is threatened, to revoke any such
authorization or approval.
(x) The Plan has been duly adopted by the required vote of
the directors of the Company and the Bank and, based upon the
certificate of the inspector of election, by the members of the
Company and the stockholder of the Bank.
(xi) Subject to the satisfaction of the conditions to the
Department of Financial Institutions, FRB, FDIC and the
Commission approval of the Conversion, the Company and the Bank
are not required to receive any further
- 23 -
approval, authorization, consent or other order of, register
with, or submit a notice to any other federal agency in
connection with the execution and delivery of this Agreement, the
issuance of the Shares, the consummation of the Conversion and
the contribution of the Foundation Shares, except as may be
required under the securities or blue sky laws of various
jurisdictions (as to which no opinion need be rendered), except
as may be required under the rules and regulations of the NASD
and/or the OTC Bulletin Board or National Daily Quotations System
(as to which no opinion need be rendered).
(xii) The Registration Statement is effective under the 1933
Act and no stop order suspending the effectiveness has been
issued under the 1933 Act or proceedings therefor initiated or,
to such counsel's Actual Knowledge, threatened by the Commission.
(xiii) At the time the Conversion Application, including the
Prospectus contained therein, was approved by the Department of
Financial Institutions and received the non-objection of the
FDIC, the Conversion Application, including the Prospectus
contained therein, complied as to form in all material respects
with the requirements of the Federal Deposit Insurance Act and
the Regulations promulgated thereunder and the Conversion
Regulations (other than the financial statements, the notes
thereto, and other tabular, financial, statistical and appraisal
data included therein or omitted therefrom, as to which no
opinion need be rendered).
(xiv) At the time that the Registration Statement became
effective, the Registration Statement (as amended or
supplemented, if so amended or supplemented) (other than the
financial statements, the notes thereto and other tabular,
financial, statistical and appraisal data included therein or
omitted therefrom, as to which no opinion need be rendered)
complied as to form in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations.
(xv) The terms and provisions of the Shares of the Company
conform, in all material respects, to the description thereof
contained in the Registration Statement and Prospectus, and the
form of certificate used to evidence the Shares complies with
Washington state law.
(xvi) The descriptions in the Conversion Application, the
Registration Statement and the Prospectus of the contracts,
indentures, mortgages, loan agreements, notes, leases or other
instruments filed as exhibits thereto are accurate in all
material respects and fairly present the information required to
be shown.
(xvii) The Company and the Bank have conducted the
Conversion, in all material respects, in accordance with all
applicable requirements of the Plan, the Conversion Regulations,
Federal Deposit Insurance Act and Regulations thereunder and BHCA
and Regulations thereunder and the 33 Act and 33 Act Regulations;
the Plan complies in all material respects with, the Conversion
Regulations, Federal Deposit Insurance Act and Regulations
thereunder and BHCA and
- 24 -
Regulations thereunder and the 33 Act and 33 Act Regulations, and
all decisions and orders issued thereunder (except where a
written waiver has been received); no order has been issued or is
pending by the Department of Financial Institutions, FDIC, FRB,
the Commission or any other federal or state authority to suspend
the Offering or the use of the Prospectus, and no action for such
purposes has been instituted or, to such counsel's Actual
Knowledge, threatened by the Federal Deposit Insurance Act and
Regulations thereunder and BHCA and Regulations thereunder and/or
the Commission or any state authority and, to such counsel's
Actual Knowledge, no person has sought to obtain regulatory or
judicial review of the final action of the Department of
Financial Institutions approving the Plan and Conversion
Application or FDIC's non-objection.
(xviii) To such counsel's Actual Knowledge, the Company and
the Bank have obtained all material federal licenses, permits and
other governmental authorizations currently required under the
federal and state law and all applicable rules and regulations
promulgated thereunder for the conduct of their businesses and to
such counsel's Actual Knowledge all such licenses, permits and
other governmental authorizations are in full force and effect.
(xix) To such counsel's Actual Knowledge, neither the
Company, the Bank nor any of their subsidiaries are in violation
of their articles of incorporation, charter, or their respective
bylaws; neither the Company, the Bank nor any of their
subsidiaries are in default or violation of any obligation,
agreement, covenant or condition contained in any contract,
indenture, loan agreement, note, lease or other instrument
described in the Prospectus or filed as an exhibit to the
Registration Statement to which it is a party or by which it or
its property may be bound, except for such defaults or violations
which would not have a material adverse impact on the financial
condition or results of operations of the Company and the Bank on
a consolidated basis; the execution and delivery of this
Agreement, the occurrence of the obligations herein set forth and
the consummation of the transactions contemplated herein will not
conflict with or constitute a breach of, or default under, or
result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the Bank
or any subsidiary pursuant to any contract, indenture, loan
agreement, note, lease or other instrument filed as an exhibit to
the Registration Statement to which the Company, the Bank or any
subsidiary is a party or by which any of them may be bound, or to
which any of the property or assets of the Company, the Bank or
any subsidiary is subject (other than the establishment of a
liquidation account), and such action will not result in any
violation of the provisions of the articles of incorporation,
charter, or respective bylaws as applicable, of the Company, the
Bank or any subsidiary or any applicable federal law, act,
regulation (except that no opinion need be rendered with respect
to the securities or blue sky laws of various jurisdictions or
the rules and regulations of the NASD and/or the Nasdaq National
Market or order or court order, writ, injunction or decree naming
the Company or the Bank.
(xx) The Company's articles of incorporation and bylaws
comply in all material respects with the laws of the state of
Washington. The Bank's charter and bylaws and the Commercial
Bank's charter and bylaws comply in all material respects
- 25 -
with Washington Law and the rules and regulations promulgated
thereunder and the Federal Deposit Insurance Act and Regulations
thereunder.
(xxi) The Foundation has been duly organized and is validly
existing as a Washington non-profit corporation and is recognized
as a tax-exempt organization under Section 501(c)(3) of the
Internal Revenue Code of 1986 and is in compliance with
Washington state laws, FDIC Regulations and the Internal Revenue
Code of 1986, as amended, and Regulations thereunder.
(xxii) To such counsel's Actual Knowledge, neither the
Company nor the Bank is in violation of any written directive
from the Department of Financial Institutions, FRB or the FDIC to
make any material change in the method of conducting their
respective business.
(xxiii) The information regarding the Xxxxxxx Mutual tax
opinion under the caption ["Everett Mutual's Conversion-Effects
of Conversion to Stock Form on Deposits and Borrowers of the
Xxxxxxx Mutual-Tax Effects"] has been reviewed by such counsel
and constitutes a correct summary of the opinion rendered by
Deloitte & Touche LLP to the Company and the Bank with respect to
such matters.
(xxiv) The Company and the Bank are not required to receive
any further approval, authorization, consent or other order of,
register with or submit a notice to any Washington regulatory
agency in connection with the execution and delivery of this
Agreement, the issuance of the Shares and the consummation of the
Conversion, except as may be required under the securities or
blue sky laws of various jurisdictions.
(xxv) The information in the Prospectus under the captions
"Regulation," "Mutual Bancshares' Conversion," "Restrictions on
Acquisition of EverTrust Financial Group, Inc." and "Description
of Capital Stock of EverTrust Financial Group, Inc.," to the
extent that such information constitutes matters of law,
summaries of legal matters, documents or proceedings, or legal
conclusions, has been reviewed by such counsel and is correct in
all material respects. The description of the Conversion process
under the caption "Mutual Bancshares' Conversion" in the
Prospectus has been reviewed by such counsel and is in all
material respects correct. The discussion of federal statutes and
Washington law or regulations promulgated thereunder described or
referred to in the Prospectus are accurate summaries. The
information regarding the federal tax opinion under the caption
"Mutual Bancshares Conversion-Effects of Conversion to Stock Form
on Depositors and Borrowers of Xxxxxxx Mutual-Tax Effects" has
been reviewed by such counsel and constitutes an accurate summary
of the opinion rendered by such counsel to the Company and the
Bank with respect to such matters subject to the qualifications
and limitations noted therein.
In giving such opinion, such counsel may rely as to all
matters of fact on certificates of officers or directors of the
Company and the Bank and certificates of public officials. Such
counsel's opinion shall be limited to matters governed by federal
- 26 -
laws and by Washington Law. The opinion of Breyer & Associates,
PC shall be governed by and subject to the qualifications
contained in the Legal Opinion Accord ("Accord") of the American
Bar Association Section of Business Law (1991). The term "Actual
Knowledge" as used herein shall have the meaning set forth in the
Accord. For purposes of such opinion, no proceedings shall be
deemed to be pending, no order or stop order shall be deemed to
be issued, and no action shall be deemed to be instituted unless,
in each case, a director or executive officer of the Company or
the Bank shall have received a copy of such proceedings, order,
stop order or action. In addition, such opinion may be limited to
current statutes, regulations and judicial interpretations and to
facts as they currently exist; in rendering such opinion, such
counsel need assume no objection to revise or supplement it
should the current laws be changed by legislative or regulatory
action, judicial decision or otherwise; and such counsel need
express no view, opinion or belief with respect to whether any
proposed or pending legislation, if enacted, or any proposed or
pending regulations or policy statements issued by any regulatory
agency, whether or not promulgated pursuant to any such
legislation, would affect the validity of the Conversion or any
aspect thereof. Such counsel may assume that any agreement is the
valid and binding obligation of any parties to such agreement
other than the Company or the Bank.
In addition, such counsel shall provide a letter stating
that during the preparation of the Registration Statement and the
Prospectus, they participated in conferences with certain
officers of, the independent public accountants for, and other
representatives of the Company and the Bank, and on ________
___and ___ and ________ ___, 1999, Xxxx and its counsel, at which
conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, while such
counsel has not confirmed the accuracy or completeness of or
otherwise verified the information contained in the Registration
Statement or the Prospectus, and does not assume any
responsibility for such information, based upon such conferences
and a review of documents deemed relevant for the purpose of
issuing their letter (relying as to materiality as to factual
matters on certificates of officers and other factual
representations by the Company and the Bank), nothing has come to
their attention that would lead them to believe that the
Registration Statement, or any amendment or supplement thereto
(other than the financial statements, the notes thereto, and
other tabular, financial, statistical and appraisal data included
therein or omitted therefrom as to which no statement need be
made), as of the date of effectiveness, and the Prospectus, as of
its date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading.
(2) The favorable opinion, dated as of the Closing Date, of
Xxxxxx Xxxxx LLP, Xxxx'x counsel, with respect to such matters as Xxxx
may reasonably require. Such opinion may rely upon the opinions of
counsel to the Company and the Bank, and as to matters of fact, upon
certificates of officers and directors of the Company and the Bank
delivered pursuant hereto or as such counsel shall reasonably request.
- 27 -
(d) At the Closing Date, Xxxx shall receive a certificate of the Chief
Executive Officer and the Chief Financial Officer of the Company and a
certificate of the Chief Executive Officer and the Chief Financial Officer
of the Bank, both dated as of such Closing Date, to the effect that: (i)
they have reviewed the Prospectus and, in their opinion, at the time the
Prospectus became authorized for final use, the Prospectus did not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; (ii) since the
respective dates as of which information is given in the Registration
Statement and Prospectus, there has been no material adverse change in the
financial condition, or in the earnings, capital properties or business of
the Company or the Bank independently, or of the Company and the Bank
considered as one enterprise, whether or not arising in the ordinary course
of business; and, to their knowledge, no other event has occurred, which
should have been set forth in an amendment or supplement to the Prospectus
which has not been so set forth, and the conditions set forth in this
Section 7 have been satisfied; (iii) the representations and warranties in
Section 4 are true and correct with the same force and effect a though
expressly made at and as of the Closing Date; (iv) the Company and the Bank
have complied in all material respects with all agreements and satisfied
all conditions on their part to be performed or satisfied at or prior to
the Closing Date and will comply in all material respects with all
obligations to be satisfied by them after Conversion; (v) no stop order
suspending the effectiveness of the Registration Statement has been
initiated or, to the best knowledge of the Company or the Bank, threatened
by the Commission; (vi) no order suspending the Offering, the Conversion,
the acquisition of all of the shares of the Bank by the Company or the
effectiveness of the Prospectus has been issued and no proceedings for that
purpose are pending or, to the best knowledge of the Company or the Bank,
threatened by the Department of Financial Institutions, FDIC, FRB, the
Commission or any state authority; and (viii) to the best knowledge of the
Company or the Bank, no person has sought to obtain review of the final
action of the Department of Financial Institutions approving the Plan or
the FDIC's non-objection to the Plan.
(e) Prior to and at the Closing Date: (i) in the reasonable opinion of
Xxxx which is based upon complete and accurate information from the Company
and the Bank, there shall have been no material adverse change in the
financial condition, or in the earnings or business of the Bank
independently, or of the Company and the Bank considered as one enterprise,
from that as of the latest dates as of which such condition is set forth in
the Prospectus other than transactions referred to or contemplated therein;
(iii) the Company or the Bank shall not have received from the Department
of Financial Institutions, FDIC and/or the FRB any direction (oral or
written) to make any material change in the method of conducting their
business with which it has not complied (which direction, if any, shall
have been disclosed to Xxxx) or which materially and adversely would affect
the business, operations or financial condition or income of the Company
and the Bank considered as one enterprise; (iv) the Company and the Bank
shall not have been in material default (nor shall an event have occurred
which, with notice or lapse of time or both, would constitute a default)
under any
- 28 -
material provision of any agreement or instrument relating to any
outstanding indebtedness; (v) no action, suit or proceedings, at law or in
equity or before or by any federal or state commission, board or other
administrative agency, shall be pending or, to the knowledge of the Company
or the Bank, threatened against the Company or the Bank or affecting any of
their properties wherein an unfavorable decision, ruling or finding would
materially and adversely affect the business operations, financially
condition or income of the Company and the Bank considered as one
enterprise; and (vi) the Shares have been qualified or registered for
offering and sale or exempted therefore under the securities or blue sky
laws of the jurisdictions as Xxxx shall have requested and as agreed to by
the Company and the Bank.
(f) Concurrently with the execution of this Agreement, Xxxx shall
receive a letter from Deloitte & Touche LLP, dated as of the date of the
Prospectus and addressed to Xxxx: (i) confirming that Deloitte & Touche LLP
is a firm of independent public accountants within the meaning of Rule 101
of the Code of Professional Ethics of the American Institute of Certified
Public Accountants and applicable regulations of the FDIC and stating in
effect that in Deloitte & Touche LLP's opinion the financial statements of
the Bank as of March 31, 1999 and 1998 and for the years ended March 31,
1999, 1998 and 1997, as are included in the Prospectus and covered by its
opinion included therein, comply as to form in all material respects with
the applicable accounting requirements and related published rules and
regulations of the FDIC, Department of Financial Institutions, FRB and the
1933 Act; (ii) a statement from Deloitte & Touche LLP in effect that, on
the basis of certain agreed upon procedures (but not an audit in accordance
with generally accepted auditing standards) consisting of a reading of the
latest available unaudited interim financial statements of the Bank
prepared by the Bank, a reading of the minutes of the meetings of the Board
of Directors and members of the Bank and consultations with officers of the
Bank responsible for financial and accounting matters, nothing came to
their attention which caused them to believe that: (A) the unaudited
financial statements included in the Prospectus, are not in conformity with
the 1933 Act, applicable accounting requirements of the FDIC, Department of
Financial Institutions, FRB and generally accepted accounting principles
applied on a basis substantially consistent with that of the audited
financial statements included in the Prospectus; or (B) during the period
from the date of the latest unaudited financial statements included in the
Prospectus to a specified date not more than three business days prior to
the date of the Prospectus, except as has been described in the Prospectus,
there was any material increase in borrowings, other than normal deposit
fluctuations, by the Bank; or (C) there was any decrease in net assets of
the Bank at the date of such letter as compared with amounts shown in the
latest unaudited statement of condition included in the Prospectus; and
(iii) a statement from Deloitte & Touche LLP that, in addition to the audit
referred to in their opinion included in the Prospectus and the performance
of the procedures referred to in clause (ii) of this subsection (f), they
have compared with the general accounting records of the Bank, which are
subject to the internal controls of the Bank, the accounting system and
other data prepared by the Bank, directly from such accounting records, to
the extent specified in such letter, such amounts and/or percentages set
forth in the Prospectus as
- 29 -
Xxxx may reasonably request; and they have reported on the results of such
comparisons.
(g) At the Closing Date, Xxxx shall receive a letter from Deloitte &
Touche LLP, dated the Closing Date, addressed to Xxxx, confirming the
statements made by them in the letter delivered by it pursuant to
subsection (f)(i) of this Section 7, the "specified date" referred to in
clause (ii) of subsection (f) thereof to be a date specified in such
letter, which shall not be more than three business days prior to the
Closing Date.
(h) At the Closing Date, Xxxx shall receive a letter from RP
Financial, LC, dated the date thereof and addressed to counsel for Xxxx,
(i) confirming that said firm is independent of the Company and the Bank
and is experienced and expert in the area of corporate appraisals within
the meaning of Title 12 of the Code of Federal Regulations, (ii) stating in
effect that the Appraisal prepared by such firm complies in all material
respects with the applicable requirements of Title 12 of the Code of
Federal Regulations, and (iii) further stating that its opinion of the
aggregate pro forma market value of the Company and the Bank expressed in
its Appraisal dated as of May 28, 1999, and most recently updated, remains
in effect.
(i) The Company and the Bank shall not have sustained since the date
of the latest audited financial statements included in the Prospectus any
material loss or interference with their businesses from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Registration Statement and
Prospectus.
(j) At or prior to the Closing Date, Xxxx shall receive: (i) a letter
of from the Department of Financial Institutions approving the Conversion
and authorizing use of the Prospectus; (ii) a non-objection letter from the
FDIC; (iii) a copy of the order from the Commission declaring the
Registration Statement effective; (iv) a certificate from the Department of
Financial Institutions evidencing the existence of the Bank; (v)
certificates of good standing from the State of Washington and any other
state the Company is incorporated evidencing the good standing of the
Company; (vi) a certificate from the FDIC evidencing the Bank's insurance
of accounts; and (vii) a letter of the FHLB-Seattle evidencing the Bank's
membership thereof; and (viii) a copy of the letter from the FRB approving
the Company's Holding Company Application.
(k) As soon as available after the Closing Date, Xxxx shall receive,
upon request, a copy of the Company's articles of incorporation.
(l) Subsequent to the date hereof, there shall not have occurred any
of the following: (i) a suspension or limitation in trading in securities
generally on the New York Stock Exchange or in the over-the-counter market,
or quotations halted generally on the Nasdaq National Market, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices
for securities have been required by either of such
- 30 -
exchanges or the NASD or by order of the Commission or any other
governmental authority; (ii) a general moratorium on the operations of
commercial banks or federal savings associations or a general moratorium on
the withdrawal of deposits from commercial banks or federal savings
associations declared by federal or Washington authorities; (iii) the
engagement by the United States in hostilities which have resulted in the
declaration, on or after the date hereof, of a nationalemergency or war; or
(iv) a material decline in the price of equity or debt securities if the
effect of such a decline, in Xxxx'x reasonable judgment, makes it
impracticable or inadvisable to proceed with the Offering or the delivery
of the shares on the terms and in the manner contemplated in the
Registration Statement and Prospectus.
Section 8. Indemnification.
(a) The Company and the Bank jointly and severally agree to indemnify
and hold harmless Xxxx, its officers, directors, agents, servants and
employees and each person, if any, who controls Xxxx within the meaning of
Section 15 of the 1933 Act or Section 20(a) of the 1934 Act, against any
and all loss, liability, claim, damage or expense whatsoever (including but
not limited to reasonable and documented settlement expenses), joint or
several, that Xxxx or any of them may suffer or to which Xxxx and any such
persons may become subject under all applicable federal or state laws or
otherwise, and to promptly reimburse Xxxx and any such persons upon written
demand for any expense (including reasonable and documented fees and
disbursements of counsel) incurred by Xxxx or any of them in connection
with investigating, preparing or defending any actions, proceedings or
claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions: (i) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment or supplement thereto),
preliminary or final Prospectus (or any amendment or supplement thereto),
the Conversion Application (or any amendment or supplement thereto), Notice
of Conversion, the Holding Company Application or any blue sky application
or other instrument or document executed by the Company or the Bank or
based upon written information supplied by the Company or the Bank filed in
any state or jurisdiction to register or qualify any or all of the Shares
or to claim an exemption therefrom, or provided to any state or
jurisdiction to exempt the Company as a broker-dealer or its officers,
directors and employees as broker-dealers or agents, under the securities
laws thereof (collectively, the "Blue Sky Application"), or any application
or other document, advertisement, oral statement or communication ("Sales
Information") prepared, made or executed by or on behalf of the Company or
the Bank with their consent or based upon written or oral information
furnished by or on behalf of the Company or the Bank, whether or not filed
in any jurisdiction, in order to qualify or register the Shares or to claim
an exemption therefrom under the securities laws thereof; (ii) arise out of
or based upon the omission or alleged omission to state in any of the
foregoing documents or information, a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; or (iii) arise
from any theory of liability whatsoever relating to or arising from or
based upon the Registration Statement (or any amendment
- 31 -
or supplement thereto), preliminary or final Prospectus (or any amendment
or supplement thereto), the Conversion Application, Holding Company
Application (or any amendment or supplement thereto), any Blue Sky
Application or Sales Information or other documentation distributed in
connection with the Conversion; provided, however, that no indemnification
is required under this paragraph (a) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon Xxxx'x xxxxx
negligence, bad faith or willful misconduct (as determined in a final
judgment by a court of competent jurisdiction) or upon any untrue material
statement or alleged untrue material statements in, or material omission or
alleged material omission from, the Registration Statement (or any
amendment or supplement thereto), preliminary or final Prospectus (or any
amendment or supplement thereto), the Conversion Application, Holding
Company Application, any Blue Sky Application or Sales Information made in
reliance upon and in conformity with information furnished in writing to
the Company or the Bank by Xxxx regarding Xxxx or statistical information
regarding national averages provided by Xxxx for the Sales Information and
provided further that such indemnification shall be to the extent permitted
by the Department of Financial Institutions, FDIC and FRB.
(b) Xxxx agrees to indemnify and hold harmless the Company and the
Bank, their directors and officers and each person, if any, who controls
the Company or the Bank within the meaning of Section 15 of the 1933 Act or
Section 20(a) of the 1934 Act against any and all loss, liability, claim,
damage or expense whatsoever (including but not limited to reasonable and
documented settlement expenses), joint or several, which it, or any of
them, may suffer or to which it, or any of them may become subject under
all applicable federal and state laws or otherwise, and to promptly
reimburse the Company, the Bank, and any such persons upon written demand
for any expenses (including reasonable and documented fees and
disbursements of counsel) incurred by it, or any of them, in connection
with investigating, preparing or defending any actions, proceedings or
claims (whether commenced or threatened) to the extent such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment or supplement thereto), the
Conversion Application (or any amendment or supplement thereto) or the
preliminary or final Prospectus (or any amendment or supplement thereto),
or are based upon the omission or alleged omission to state in any of the
foregoing documents a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that Xxxx'x
obligations under this Section 8(b) shall exist only if and only to the
extent that such untrue statement or alleged untrue statement was made in,
or such material fact or alleged material fact was omitted from, the
Registration Statement (or any amendment or supplement thereto), the
preliminary or final Prospectus (or any amendment or supplement thereto)
the Conversion Application, Holding Company Application (or any amendment
or supplement thereto), any Blue Sky Application or Sales Information in
reliance upon and in conformity with information furnished in writing to
the Company or the Bank by Xxxx regarding Xxxx or statistical information
regarding national averages provided by Xxxx for the Sales Information.
- 32 -
(c) Each indemnified party shall give prompt written notice to each
indemnifying party of any action, proceeding, claim (whether commenced or
threatened), or suit instituted against it in respect of which indemnity
may be sought hereunder, but failure to so notify an indemnifying party
shall not relieve it from any liability which it may have on account of
this Section 8 or otherwise. An indemnifying party may participate at its
own expense in the defense of such action. In addition, if it so elects
within a reasonable time after receipt of such notice, an indemnifying
party, jointly with any other indemnifying parties receiving such notice,
may assume defense of such action with counsel chosen by it and approved by
the indemnified parties that are defendants in such action, unless such
indemnified parties reasonably object to such assumption on the ground that
there may be legal defenses available to them that are different from or in
addition to those available to such indemnifying party. If an indemnifying
party assumes the defense of such action, the indemnifying parties shall
not be liable for any fees and expenses of counsel for the indemnified
parties incurred thereafter in connection with such action, proceeding or
claim, other than reasonable costs of investigation. In no event shall the
indemnifying parties be liable for the fees and expenses of more than one
separate firm of attorneys (and any special counsel that said firm may
retain) for each indemnified party in connection with any one action,
proceeding or claim or separate but similar or related actions, proceeding
or claim or separate but similar or related actions, proceedings or claims
in the same jurisdiction arising out of the same general allegations or
circumstances.
(d) The agreements contained in this Section 8 and in Section 9 hereof
and the representations and warranties of the Company and the Bank set
forth in this Agreement shall remain operative and in full force and effect
regardless of: (i) any investigation made by or on behalf of Xxxx or its
officers, directors or controlling persons, agents or employees or by or on
behalf of the Company or the Bank or any officers, directors or controlling
persons, agents or employees of the Company or the Bank; (ii) delivery of
and payment hereunder for the Shares; or (iii) any termination of this
Agreement.
Section 9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 8 is due in accordance with its terms but is for any reason held by a
court to be unavailable from the Company, the Bank or Xxxx, the Company, the
Bank and Xxxx shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding of any claims asserted, but after deducting any contribution received
by the Company, the Bank or Xxxx from persons other than the other party
thereto, who may also be liable for contribution) in such proportion so that
Xxxx is responsible for that portion represented by the percentage that the fees
paid to Xxxx pursuant to Section 2 of this Agreement (not including expenses)
bears to the gross proceeds received by the Company from the sale of the Shares
in the Offering and the Company and the Bank shall be responsible for the
balance. If, however, the allocation provided above is not permitted by
applicable law or if the indemnified party
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failed to give the notice required under Section 8 above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative fault of
the Company and the Bank on the one hand and Xxxx on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions, proceedings or claims in respect thereto), but also
the relative benefits received by the Company and the Bank on the one hand and
Xxxx on the other from the Offering (before deducting expenses). The relative
fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Company
and/or the Bank on the one hand or Xxxx on the other and the parties' relative
intent, good faith, knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company, the Bank and Xxxx agree that
it would not be just and equitable if contribution pursuant to this Section 9
were determined by pro-rata allocation or by any other method of allocation
which does not take into account the equitable considerations referred to above
in this Section 9. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions, proceedings or
claims in respect thereof) referred to above in this Section 9 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action, proceeding
or claim. It is expressly agreed that Xxxx shall not be required to contribute
any amount which in the aggregate exceeds the amount paid (excluding
reimbursable expenses) to Xxxx under this Agreement. It is understood that the
above stated limitation on Xxxx'x liability for contribution is essential to
Xxxx and that Xxxx would not have entered into this Agreement if such limitation
had not been agreed to by the parties to this Agreement. No person found guilty
of any fraudulent misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any person who was not found
guilty of such fraudulent misrepresentation. The obligations of the Company and
the Bank under this Section 9 and under Section 8 shall be in addition to any
liability which the Company and the Bank may otherwise have. For purposes of
this Section 9, each of Xxxx'x, the Company's or the Bank's officers and
directors and each person, if any, who controls Xxxx or the Company or the Bank
within the meaning of the 1933 Act and the 1934 Act shall have the same rights
to contribution as Xxxx, the Company or the Bank. Any party entitled to
contribution, promptly after receipt of notice of commencement of any action,
suit, claim or proceeding against such party in respect of which a claim for
contribution may be made against another party under this Section 9, will notify
such party from whom contribution may be sought, but the omission to so notify
such party shall not relieve the party from whom contribution may be sought from
any other obligation it may have hereunder or otherwise than under this Section
9.
Section 10. Survival of Agreements, Representations and Indemnities. The
respective indemnities of the Company, the Bank and Xxxx and the representations
and warranties and other statements of the Company, the Bank and Xxxx set forth
in or made pursuant to this Agreement shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on
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behalf of Xxxx, the Company, the Bank or any controlling person referred to in
Section 8 hereof, and shall survive the issuance of the Shares, and any legal
representative, successor or assign of Xxxx, the Company, the Bank, and any such
controlling person shall be entitled to the benefit of the respective
agreements, indemnities, warranties and representations.
Section 11. Termination. Xxxx may terminate its obligations under this
Agreement by giving the notice indicated below in this Section 11 at any time
after this Agreement becomes effective as follows:
(a) In the event the Company fails to sell all of the Shares by
________ ___, 1999, and in accordance with the provisions of the Plan or as
required by the Conversion Regulations, and applicable law, this Agreement
shall terminate upon refund by the Bank to each person who has subscribed
for or ordered any of the Shares the full amount which it may have received
from such person, together with interest as provided in the Prospectus, and
no party to this Agreement shall have any obligation to the other
hereunder, except for payment by the Company and/or the Bank as set forth
in Sections 2(a) and (d), 6, 8 and 9 hereof.
(b) If any of the conditions specified in Section 7 shall not have
been fulfilled when and as required by this Agreement, unless waived in
writing, by the Closing Date, this Agreement and all of Xxxx'x obligations
hereunder may be cancelled by Xxxx by notifying the Company and the Bank of
such cancellation in writing at any time at or prior to the Closing Date,
and any such cancellation shall be without liability of any party to any
other party exceptas otherwise provided in Sections 2, 6, 8 and 9 hereof.
(c) If Xxxx elects to terminate this Agreement with respect to it as
provided in this Section, the Company and the Bank shall be notified
promptly by such Agent by telephone or telegram, confirmed by letter.
The Company and the Bank may terminate this Agreement with respect to
Xxxx in the event Xxxx is in material breach of the representations and
warranties or covenants contained in Section 5.2 and such breach has not
been cured after the Company and the Bank have provided Xxxx with notice of
such breach.
This Agreement may also be terminated by mutual written consent of the
parties hereto.
Section 12. Notices. All communications hereunder, except as herein
otherwise specifically provided, shall be mailed in writing and if sent to Xxxx
shall be mailed, delivered or telegraphed and confirmed to Xxxxxxx Xxxx &
Company, 000 Xxxxxxxxx, Xxxxxx, Xxxx 00000-0000, Attention: Xxxxxxxx X. XxXxxxx
(with a copy to Xxxxxx Xxxxx LLP, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000
Attention: Xxxxxx Passaic, Jr., Esq.) and, if sent to the Company and the Bank,
shall be mailed, delivered or telegraphed and confirmed to the Company and the
Bank at EverTrust Financial Group, Inc., 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxxxxxxx 00000, Attention:
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Xxxxxxx X. Xxxxxx, President and Chief Executive Officer (with a copy to Breyer
& Associates PC, 0000 Xxx Xxxx Xxxxxx, X.X., Xxxxx 000 Xxxx, Xxxxxxxxxx, X.X.
00000, Attention: Xxxx X. Xxxxxx, Xx., Esq.).
Section 13. Parties. The Company and the Bank shall be entitled to act and
rely on any request, notice, consent, waiver or agreement purportedly given on
behalf of Xxxx when the same shall have been given by the undersigned. Xxxx
shall be entitled to act and rely on any request, notice, consent, waiver or
agreement purportedly given on behalf of the Company or the Bank, when the same
shall have been given by the undersigned or any other officer of the Company or
the Bank. This Agreement shall inure solely to the benefit of, and shall be
binding upon, Xxxx, the Company, the Bank, and their respective successors,
legal representatives and assigns, and no other person shall have or be
construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provision herein contained. It
is understood and agreed that this Agreement, including Exhibit A thereto, is
the exclusive agreement among the parties hereto, and supersedes any prior
agreement among the parties and may not be varied except in writing signed by
all the parties.
Section 14. Closing. The closing for the sale of the Shares shall take
place on the Closing Date at such location as mutually agreed upon by Xxxx and
the Company and the Bank. At the closing, the Company and the Bank shall deliver
to Xxxx in next day funds the commissions, fees and expenses due and owing to
Xxxx as set forth in Sections 2 and 6 hereof and the opinions and certificates
required hereby and other documents deemed reasonably necessary by Xxxx shall be
executed and delivered to effect the sale of the Shares as contemplated hereby
and pursuant to the terms of the Prospectus.
Section 15. Partial Invalidity. In the event that any term, provision or
covenant herein or the application thereof to any circumstance or situation
shall be invalid or unenforceable, in whole or in part, the remainder hereof and
the application of said term, provision or covenant to any other circumstances
or situation shall not be affected thereby, and each term, provision or covenant
herein shall be valid and enforceable to the full extent permitted by law.
Section 16. Construction. This Agreement shall be construed in accordance
with the laws of the State of Ohio.
Section 17. Counterparts. This Agreement may be executed in separate
counterparts, each of which so executed and delivered shall be an original, but
all of which together shall constitute but one and the same instrument.
[Remainder of the Page is Intentionally Blank]
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If the foregoing correctly sets forth the arrangement among the Company,
the Bank and Xxxx, please indicate acceptance thereof in the space provided
below for that purpose, whereupon this letter and Xxxx'x acceptance shall
constitute a binding agreement.
Very truly yours,
MUTUAL BANCSHARES, INC.
By: ___________________________
Xxxxxxx X. Xxxxxx
President and Chief
Executive Officer
EVERETT MUTUAL BANK
By: ___________________________
Xxxxxxx X. Xxxxxx
President and Chief
Executive Officer
Accepted as of the date first above written
XXXXXXX XXXX & COMPANY,
A DIVISION OF XXXXX, XXXXXXXX & XXXXX, INC.
By: ___________________________
Xxxxxxxx X. XxXxxxx
Executive Vice President
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